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June 3, 2008 / Toby Dayton

Too Many Venture Firms Operate Under A Double Standard

One of the amusing things about raising private equity or venture capital is observing, firsthand, the double standard by which some venture/private equity firms operate. Over the years, I have seen more than a few examples of VCs exhibiting behavior, poor judgement, and bad business decision making that would elicit a berating diatribe should the very same violation occur from one of their portfolio companies or a company pitching them. It may be just a small minority of firms, but I laugh and shake my head in bewilderment every time I see how some of these firms conduct their own business.

Not only have I seen it firsthand, but reading TheFunded.com on a regular basis also provides a constant stream of offenses – rudeness, arrogance, atrocious listening skills, failure to provide a timely response (if a response is even given at all), meeting with companies for the sole purpose of researching a competitior on behalf of an existing portfolio company, etc. Every venture firm should be reading TheFunded to not only monitor their own reputation in the marketplace, but to also better understand the types of offenses that should be avoided at all costs if they hope to create a successful, sustainable business model.

It’s just a tiny, insignificant example of the same phenomena, but I also chuckle every time I come across a poorly designed, outdated, or neglected web site of a VC firm. I especially like seeing VC firms like Velocity Interactive Group that start a blog and then abandon the effort after 2 posts in 2 months and fail to remove the blog from their site even though there hasn’t been a post since December 15th, 2007. I wonder how many times they’ve beaten up on a company pitching them for neglecting their web presence. The lapse becomes even more amusing after reading the text on their homepage…

“On the forefront of digital media and communications you’ll find Velocity Interactive Group. Comprised of some of the most experienced and visionary investors, executives and entrepreneurs in digital media and communications…”

Again, it’s a small, perhaps even trite example, but indicative nevertheless of the double standard by which many VC firms operate.